How does online banking work? Fraud on credit card

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Lynette
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How does online banking work? Fraud on credit card

Post by Lynette » Wed Apr 06, 2016 4:41 pm

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statman
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Re: How does online banking work?

Post by statman » Wed Apr 06, 2016 4:48 pm

The common and effective way to auto-pay your monthly bills is to ask the payees to set up withdrawal from your designated bank account rather than to ask the bank. Almost all utility (etc) companies allow you to set this up on their Web sites. With two homes in different states, we have more that 15 bills debited from our checking account each month, with no problems in more than a decade of doing this.

The Wizard
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Re: How does online banking work?

Post by The Wizard » Wed Apr 06, 2016 4:51 pm

Two different ways: pushing the $$ from your bank account or pulling it.
I use only the pulling method, also called ACH for automated clearing house.

I give my checking account details to my dental insurance and my electric company and they do an automatic monthly transaction.
Similar to what I have with Vanguard and my credit cards except that I initiate all Vanguard and CC transactions from their websites.

Bill pay is pushing the $$ and I don't use that.

So go to your gas company for starters, with your checkbook, and tell them you want to set up automatic monthly payments...
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Topic Author
Lynette
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Re: How does online banking work?

Post by Lynette » Wed Apr 06, 2016 4:57 pm

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The Wizard
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Re: How does online banking work?

Post by The Wizard » Wed Apr 06, 2016 5:02 pm

Lynette wrote:
The Wizard wrote:Two different ways: pushing the $$ from your bank account or pulling it.
I use only the pulling method, also called ACH for automated clearing house.

I give my checking account details to my dental insurance and my electric company and they do an automatic monthly transaction.
Similar to what I have with Vanguard and my credit cards except that I initiate all Vanguard and CC transactions from their websites.

Bill pay is pushing the $$ and I don't use that.

So go to your gas company for starters, with your checkbook, and tell them you want to set up automatic monthly payments...
Thanks - isn't it safer to do pulling? Then I don't have to give my banking information to the utility.
You mean "pushing", via bill pay.

The recipient of your personal check has same info either way.
You'd have to use money orders to avoid that.
But for some reason CC fraud is common, but stealing $$ from checking accounts via ACH is unheard of, mostly.
I'm not totally sure why.
Perhaps dm200 or another banker can explain...
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bayview
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Re: How does online banking work?

Post by bayview » Wed Apr 06, 2016 5:31 pm

I usually make my payments by the "pull" method (logging into the credit card, etc site, entering my banking info, and entering the date for the transfer.) DH prefers to "push" from the bank account.

We've never had security issues with either method, but I personally don't like bill pay ("pushing.") The date that the transaction actually happens sometimes seems to be different from the scheduled date, and I get twitchy, continually going in to see that it actually happened. By contrast, when I do the pull method, I get an immediate confirmation (on the screen, by email, or both) that it went through without a problem, even though it may not show up on my bank account screen for several days. But again, no problems in terms of security issues.

I think it's a question of which method we're more comfortable (= familiar) with.

--I will add that I have never laid eyes on my bank, and never expect to do so, as I bank with USAA. My parents started banking with them in the early 1950's or so, and I started in the late 60's. I have a lot of things that I brood about in terms of privacy and security, but electronic banking isn't one of them. :beer
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

The Wizard
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Re: How does online banking work?

Post by The Wizard » Wed Apr 06, 2016 5:36 pm

I agree with Bayview that electronic banking, as regards $$ transfers to intended payees, has worked flawlessly over the past few decades, as long as I've used it...
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prudent
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Re: How does online banking work?

Post by prudent » Wed Apr 06, 2016 5:43 pm

I use push 90% of the time for the last 6 or so years with zero problems. I log into my bank's billpay system, and enter the information for the company I want to pay and the account number. When I want to pay them, the system tells me how many business days to allow for the payment to arrive (I always leave a 2-day margin). Next time I need to pay someone, the information is already there and all I need to do is enter the amount and the payment date.

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FelixTheCat
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Re: How does online banking work?

Post by FelixTheCat » Wed Apr 06, 2016 5:49 pm

I have online Billpay set up for all of my bills. You enter the payee and the account number into your bank's billpay. A bill comes across electronically. The bill is paid based on a set of criteria you set up.

For example,
Pay Gas & Electric in full on the day it is due only if the bill is less than or equal to $100.
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blueblock
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Re: How does online banking work?

Post by blueblock » Wed Apr 06, 2016 5:59 pm

Lynette wrote:Take my gas utility bill for example. If I enter the address of the company, my account number and the date I want to have the amount withdrawn, how does the bank know how much I owe?
To answer this specific question, the bank does NOT know how much you owe. You have to tell them how much to pay.

I think what may be confusing you is that when you are setting up a new payee, they ask for company and account info, but not what you owe. That comes after you set up the payee and are ready to schedule a payment. Then they'll ask you when and how much.

johnubc
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Re: How does online banking work?

Post by johnubc » Wed Apr 06, 2016 6:04 pm

I bill pay from my bank to my vendors - I push the payment as I do not want a rogue pull to deplete my account without me knowing it. I also have some bills that autopay via credit card.

Topic Author
Lynette
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Re: How does online banking work?

Post by Lynette » Wed Apr 06, 2016 6:05 pm

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clown
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Re: How does online banking work?

Post by clown » Wed Apr 06, 2016 6:08 pm

To the original poster --

Your original question seemed to ask for basic info, not a debate on which method is best.

There are two different ways to go about this:
1. Contact your utility/telephone/etc company, with your checkbook in hand, and tell them you want to arrange for automatic debits from your bank account. They will ask you for your banking info, and may require you to sign a form. They will then setup the information into their computer system. You do this once and they take care of it in the future. On the designated day, they take the money out of your account. Your only obligation is to have money in your account. This is the "pulling" method -- they are initiating the transaction and pulling the money away from you. It also puts the monkey or their back, to get the right amount on the right date. Even if you are ill or on vacation, the process continues. They do have your account number, but I have never heard of a fraud happening in this scenario -- and if it did, your bank would return the debit back to the initiator (presumably a solid company not a fraudster). Because any fraudulent charge would go to the company (not the employee), there is no incentive for an employee to cheat you -- and no responsible big company such a the phone company or a utility company would want to commit fraud against you. So this is pretty secure. And as has been pointed out, the payee would have your bank account number if you were mailing in a check, so no additional risk by using automatic payments.
2. Log onto your bank's web site every month and go to their "bill pay" service. On the first time, you put in the info about the payee name (and maybe address), account number and amount. On future occasions, you go to the bill pay area and enter the current amount due and the due date. This is the "pushing" method -- you are initiating the transaction and pushing the money to them. This requires input from you each time you want to make a payment. Also worthy of note -- if the payee does not accept electronic payments (think of a rent payment to a landlord, for example), the bank creates a check and mails it to the payee. This is obviously quite secure.

Hope this helps with background.

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FelixTheCat
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Re: How does online banking work?

Post by FelixTheCat » Wed Apr 06, 2016 6:32 pm

Lynette wrote: You mention that the bill comes across electronically. How does bank know the amount to pay the electric company. Do they send a request to the electric company for the amount to be paid?
The electric company sends an electronic bill to your bank. It shows an image of the bill with the dollar amount due and the due date.

The bank looks at the rules you set up for the electric company. You can pay immediately, You can pay on the due date, You can pay X days before the due date.

The bank will automatically transmit funds to your electric company based on the rule you set up for the electric company.
Lynette wrote: So if I'm on vacation and don't log onto the internet, will the bank know how to pay the bill without my intervention?
Yes, based on the rule you set up for the electric company AND if you have money in your account.
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petiejoe
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Re: How does online banking work?

Post by petiejoe » Wed Apr 06, 2016 7:02 pm

There's a lot of confusion on this thread about what the banks are capable of, so perhaps this depends on the bank and the specific company involved. My experience is that major companies (like utilities) are registered with major banks to negotiate the billing. I don't know if there's some kind of centralized backend that they all work through or if it's on a company-by-company basis, but when you first configure the bill, your bank will tell you whether or not this particular company is eligible for automatically receiving the bill. If they're eligible, you provide your account information for the bill (e.g. your utility account number) and the bank will usually provide options for always paying in full or setting a maximum amount. They also usually have options to pay on the due date, X days before the due date, or on a fixed schedule. If the bank doesn't have the company available for automatic billing, you can usually still set up a recurring payment. When I rented from an individual, I used my bank's billpay to push the rent check to them every month.

Either way you set it up (push from the bank or pull from the company), if you decide to make an early payment, use the same mechanism or else the push and the pull can both happen and you end up with a double payment. It's still possible to end up with a double payment if you try to manually pay too close to the autopayment, but a lot of companies will warn you when you are about to do that.

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Lynette
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Re: How does online banking work?

Post by Lynette » Wed Apr 06, 2016 7:14 pm

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petiejoe
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Re: How does online banking work?

Post by petiejoe » Thu Apr 07, 2016 3:29 pm

Lynette wrote:Thanks for the explanation. I'm familiar with entering my credit card information into the vendor's website. I had to change the credit card number number it was compromised. I logged onto At&t Autopay section and replaced the credit card with my bank information. I stored it on their website. They say it is secure so hope this works. Please let me know if you think it is not. I'm gradually changing over to Chase and have been most impressed with how quickly they notify me about fraud.
Any time you're sharing personal (including financial) data with a company, there are two major things to consider for security:
* Is the transmission secure? When you're online, the sanity check is whether the page is using https and has a valid certificate. You can tell this by looking near the URL (near the top of your browser) and you should see a padlock icon. Ignore any lock pictures you see on the page itself, just pay attention to the lock next the URL. Different browsers display this slightly differently. If there's no padlock, the padlock displays "open", or the padlock has a slash through it, don't put anything on that page that you would want other people to see. The analog equivalent is what you would send via a post card. You probably wouldn't put your social security number or bank account information on a post card and stick it in the mail. By ensuring that the website is using https properly, you're doing the equivalent of putting your information in a tamper-resistant FedEx envelope.
* Is the recipient of the data trustworthy? Once AT&T (in your case) gets the data, it's up to them to handle it properly. In the worst case, the company receiving the data could put it all in an unsecure database and hand the keys (accidentally or deliberately) to the bad guys. There is no difference here between them swiping your card, you putting it in over the internet, or you calling it in. Generally this means you should only give your information to companies that you trust. However, even companies you trust make mistakes or get attacked by very serious threats so your data will leak from time to time.

The good news (as you're already aware) is that credit cards limit the customer liability if there is fraudulent activity and every credit card I've worked with it's a very simple process to get individual charges frauded out so you don't have to pay. It's still inconvenient when you have to change your card number everywhere, but you shouldn't have to worry about paying major bills. Banks (and debit cards) have similar policies, but they often have a gap of time before you get your money back and you could end up bouncing things in the meantime. For this reason, I always prefer to give my credit card over debit or bank account information unless there's a significant fee for using the credit card.

Topic Author
Lynette
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Re: How does online banking work?

Post by Lynette » Thu Apr 07, 2016 4:09 pm

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Topic Author
Lynette
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Re: How does online banking work? Fraud on credit card

Post by Lynette » Fri Apr 08, 2016 5:04 pm

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S&L1940
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Re: How does online banking work?

Post by S&L1940 » Fri Apr 08, 2016 5:35 pm

prudent wrote:I use push 90% of the time for the last 6 or so years with zero problems. I log into my bank's billpay system, and enter the information for the company I want to pay and the account number. When I want to pay them, the system tells me how many business days to allow for the payment to arrive (I always leave a 2-day margin). Next time I need to pay someone, the information is already there and all I need to do is enter the amount and the payment date.
+1
I am uncomfortable with an entity having the authority to pull money out. from my past experience, they may have the power to continue or stop the withdrawals over riding your control on your account. as in cancelling insurance that could take a payment or two to go through the payee's accounting process. you can always set up an auto pay function on the push side for a continuing pay out.
Only time we had a problem was when I mistakenly (somehow) paid Bloomingdale's :oops: instead of our utility. The dear wife was able to resolve the issue by rushing off to use up the credit at the department store. And all I had to do was send off utility payment with a $5 late fee.:confused
Don't it always seem to go * That you don't know what you've got * Till it's gone

jdb
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Re: How does online banking work? Fraud on credit card

Post by jdb » Fri Apr 08, 2016 8:04 pm

Another advocate for bill pay instead of allowing direct debits. Used both systems, but our checking account at Wells Fargo recently compromised, several fraudulent checks went through system. WF caught fraud and reversed charges but now need to set up new account, and hassle of contacting each company that was using direct debit to stop the process. From now on will just use bill pay for all accounts, they will advise me by email when bills due and can authorize by billpay in new account.

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